PAGE 1 THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 9/5/2019 GAIN Report Number: BR 1924 Brazil Livestock and Products Annual 2019 Annual Livestock Report Approved By: Oliver Flake, Agricultural Counselor Prepared By: Joao F. Silva, Agricultural Specialist Report Highlights: Post forecasts beef production in 2020 at 10.5 million metric tons, which is an increase of 3 percent. The increase is driven by solid exports, mostly to China and Hong Kong, and higher domestic demand. Post forecasts pork production to increase by 4.5 percent and reach a record of nearly 4.1 million metric tons, reflecting continued strong exports to China, higher domestic demand, and stable feed costs next year. The expected growth of the Brazilian economy in 2020 by over 2 percent, with declining inflation and unemployment rates, and higher consumer purchasing power, supports optimism in the animal protein sector in Brazil. However, trade dispute between the United States and China and exchange rate fluctuations remain uncertainties for the industry.
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PAGE 1
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Required Report - public distribution
Date: 9/5/2019
GAIN Report Number: BR 1924
Brazil
Livestock and Products Annual
2019 Annual Livestock Report
Approved By:
Oliver Flake, Agricultural Counselor
Prepared By:
Joao F. Silva, Agricultural Specialist
Report Highlights:
Post forecasts beef production in 2020 at 10.5 million metric tons, which is an increase of 3 percent.
The increase is driven by solid exports, mostly to China and Hong Kong, and higher domestic demand.
Post forecasts pork production to increase by 4.5 percent and reach a record of nearly 4.1 million metric
tons, reflecting continued strong exports to China, higher domestic demand, and stable feed costs next
year. The expected growth of the Brazilian economy in 2020 by over 2 percent, with declining inflation
and unemployment rates, and higher consumer purchasing power, supports optimism in the animal
protein sector in Brazil. However, trade dispute between the United States and China and exchange rate
fluctuations remain uncertainties for the industry.
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Executive Summary:
The outlook for beef and pork production in 2020 calls for an increase of 3 and 4.5 percent,
respectively. The main drivers supporting this production outlook are projected record exports of both
beef and pork in 2020, mostly to China, and the strengthening in domestic demand due to a rebound in
economic activity expected next year. Production factors for both beef and pork, such as stable feed
costs due to a projected bumper soybean and corn crops, and increased carcass weights, are fueling
optimism for the both industries next year. The uncertainties facing the sector are fluctuations in the
exchange rate and a possible agreement between the United States and China. The announcement of a
trade agreement between MERCOSUL and the European Union is not a driver in Post projections
because it is not expected to enter into force next year, as the agreement needs to be ratified by all
parties.
Commodities:
Animal Numbers, Cattle
Production:
Post forecasts calf crop production in 2020 to increase by two percent as herd expansion continues in
Brazil along with increasing productivity. Cattle production will continue to be supported by several
government programs, such as subsidized agricultural credit for pasture improvement, recovery of
degraded pastures, crossbreeding programs using imported cattle genetics, proper nutrition, health and
increasing use of reproductive technologies. The projected weather pattern for 2020 calls for more
precipitation benefiting pastures in the Center-West regions, which account for about 40 percent of the
cattle production in Brazil. This is an important production factor for Brazil’s grass-fed cattle.
Brazil is officially divided into five regions: North, Northeast, Center-West, Southeast and South. About
60 percent of Brazil’s cattle herd is concentrated in the Center West and North regions, mostly in the
state of Mato Grosso, Mato Grosso do Sul and Para, which are in the so-called pre-amazon area, but
outside of the Amazon biome. Expansion in these areas was spurred by cheap land and deforestation by
the wood industry. However, because of seasonal forest fires in the area, partly due to the annual dry
period (June through August), cattle producers are under scrutiny from the international community.
Expansion of cattle breeding in these three states, which together account for nearly 40 percent of the
cattle herd in Brazil, is estimated at 11 percent during the past ten years.
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As the chart above illustrates, growth in cattle is focused in the Center-West region and to a lesser
extent in the North. Only the south and southeast regions have seen an actual contraction in the size of
the heard over the past decade while the Northeastern heard has expanded but comprises a percentage of
the national share. Sao Paulo and Parana have seen the biggest decreases in beef cattle numbers while
Mato Grosso and Mato Grosso do Sul have experienced the most growth.
Livestock production in Brazil is mostly grass fed. Feedlots only account for an estimated 10 percent of
Brazil’s meat production. However, trade analysts expect production of meat under some type of feedlot
system to double in the next five years, mostly in the Center-West as a means to limit the weight loss
common in the dry season (May through September).
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Source: IEG/FNP
Confinement feeding in Brazil is estimated to have increased by about 12 percent since 2019. Feedlots
are concentrated in Sao Paulo state and the Center-West states of Mato Grosso, Goias, and Mato Grosso
do Sul. These four states alone account for 73 percent of all feedlots in Brazil. Semi-confinement
systems were cattle are fed grain rations while on pasture (primarily in the dry season) are also
increasing and concentrated in the Center-West.
Post recently visited production areas in the state of Mato Grosso do Sul where beef feedlot operations
are growing in size and efficiency. Increasingly livestock operations are using the “industrial cross” of
the local Nelore with U.S. or Argentine Angus genetics. This industrial cross is both heat and tick
tolerant (from the Nelore) while at the same time providing feed efficiency (Angus). Though generally
in Brazil there is little premium paid for quality marbling, feedlots around the Campo Grande area in
Mato Grosso do Sul reported minimal premiums for industrial cross cattle compared to straight Nelore.